Biden’s new tax hike is expected to have limited impact in the short term, but challenges in the long term if US allies follow suit.
Last week, the White House announced tariff increases on $18 billion worth of Chinese imports, including electric vehicles, semiconductors, lithium-ion batteries, medical devices.
Previously, in April, US President Joe Biden said that he “did not want to go to war with China” but that the US needed to fight Beijing’s unfair economic activities and excess industrial capacity“.
“American workers can be more productive and competitive than anyone as long as competition is fair. But that hasn’t been fair for too long”, Mr. Biden said this week. “We will not let China flood our market”, he added.
Below is the impact of the new tax increase on Chinese goods.
Electric vehicle
The Biden administration quadrupled electric vehicle taxes to ensure “the future of the auto industry will be created in America by American workers”.
Nomura forecasts “limited short-term impact” because the US only accounts for 1% of the country’s total vehicle exports. The Center for Strategic and International Studies (CSIS) said China exported 12,362 electric vehicles to the US in 2023, with about 10,000 belonging to the Polestar brand.
Meanwhile, electric vehicle companies are increasing their push of goods into South America. BYD’s first quarter exports increased more than 150%, to more than 97,000 vehicles. Of which, Brazil accounts for 15,700 vehicles, equivalent to 16%. Japanese commodity trader Hanwa also said electric vehicle exports from China to Mexico have increased in recent months. According to Nikkei, most major electric vehicle companies are competing to book more seats to transport electric vehicles to Brazil and Mexico.
But the impact could be greater if the EU and the UK, together, raise taxes like the US. “We are not worried about the new US tariffs because they are not sold directly to this country, but are worried about what signals it will send to other countries, especially US allies”, the leader of a company Chinese electric vehicles told Nikkei.
In October, the European Commission launched an investigation into whether Chinese electric vehicle companies benefited from state subsidies that helped them lower prices. EU trade chief Valdis Dombrovskis recently hinted that Brussels could impose tariffs before the summer break.
According to market research firm TrendForce, Chinese electric vehicle manufacturers consider Western Europe an important export destination, followed by Southeast Asia.
Lithium-ion batteries
Taxes on lithium-ion batteries used for electric vehicles will increase to 25% from 7.5% this year. Analysts predict the tariff hike has a deeper impact on Chinese companies exporting electric vehicle lithium-ion batteries and battery components, giving Japanese and South Korean battery companies a greater advantage in the U.S. market.
But Chinese battery manufacturers planning to build factories in the US such as Envision and Gotion High-tech could benefit. They could face a bigger impact in 2026, when a 25% tax on non-electric lithium-ion batteries takes effect.
At that point, Chinese battery exporters could see their cost advantage wane over their American rivals, who could take advantage of the tax incentives provided by the Biden administration under the Inflation Reduction Act.
Rare earth
Tariffs on rare earths increased to 25% in 2026. According to experts, this is surprising because the US rare earth industry cannot compete with China in terms of market share, costs, and experience.
Rare earths are an important and non-renewable strategic resource, widely used in new energy sectors such as vehicle engines and wind turbines. The US move to increase tariffs to protect domestic businesses and reduce dependence on rare earth imports from China.
China is the world’s largest rare earth producer. The country produced 240,000 tons of rare earth products last year, accounting for 68% of total global production, data from the U.S. Geological Survey.
Semiconductors
Tax rates on semiconductors from China increased to 50% from 25% in 2025. According to some analysts, increased tariffs could weaken China’s chip manufacturing industrial ecosystem. However, manufacturers can integrate their chips into products such as home appliances and electronics, and then export the finished product to the U.S. as a way to circumvent tariffs.
However, the Peterson Institute for International Economics said that semiconductor manufacturers that supply the larger and more popular Chinese chips play an important irreplaceable role. The reason is because Taiwanese and Korean companies such as TSMC and Samsung focus on producing higher-end chips.
Solar cells
Taxes on solar cells doubled to 50% this year. But the U.S. market is small with China, and exports to it have been subject to tariffs for more than a decade. Last year, China exported $3.35 million in solar cells to the US, less than 0.1% of the country’s total turnover. So Nomura says there will be limited impact in the short term.
According to the Center for Strategic and International Studies in Washington, more than 80% of solar panel production now takes place in China, and panel production costs are 60% cheaper in China than in the US.
Earlier, Chinese solar panel manufacturers had also moved their supply chains to several Southeast Asian countries such as Malaysia, Cambodia, Thailand and Vietnam to avoid U.S. restrictions. In 2023, four Southeast Asian countries accounted for about 75% of all U.S. imports of front-end batteries.
In April, a number of US solar equipment manufacturers petitioned the Ministry of Commerce to impose new tariffs on imports from Southeast Asian countries. Zhong Baoshen, chairman of Green Energy Technology Longi, predicted that solar cells from Southeast Asian countries would be difficult to sell to the United States. Therefore, manufacturers may have to open factories in the US as an option to access this market.
Medical Equipment
This year, taxes on syringes and needles will increase from 0% to 50% and, with some personal protective equipment such as respirators and masks, will increase to 25% from the current 0 – 7.5. Tariffs on rubber medical and surgical gloves will increase to 25% from 7.5% in 2026.
The US is China’s leading medical equipment export market, with a turnover of nearly 10.8 billion USD last year. However, the impact will likely be limited as many manufacturers of products with increased tariffs have changed industries due to a sharp drop in demand after the pandemic, according to Caixin. In 2023, China’s exports of anti-epidemic products plummeted by 75.7%, to about $3.9 billion.
Container port crane
Large cranes used at ports to load and unload goods from container ships ashore and vice versa (ship-to-shore cranes) have had taxes increased from 0% to 25% this year. The decision came after the US Coast Guard issued a Maritime Security Directive in February on cyber risk management for this type of crane manufactured in China.
In early 2023, U.S. defense officials expressed concern that a Chinese crane manufacturer such as Shanghai Zhenhua Heavy Industries could be used as a spy tool by Beijing, comments China criticized as “paranoid”.
At the time, about 80 percent of freight cranes in U.S. ports were made in China and used Chinese software, senior U.S. administration officials said.
Steel and aluminum
With some steel and aluminum products, tariffs will increase to 25% this year, from 0 – 7.5%. The White House cited unfair competition in these areas due to “China’s non-market surplus”.
The expert predicted the impact could be limited. This is because the volume of US imports is relatively low and Chinese steel products are already subject to significant tariffs. According to S&P Global Market Intelligence, China accounted for less than 1% of US steel imports in the first two months of 2024.
Meanwhile, manufacturers of aluminum products should be more cautious. Chinese aluminium exported to the US is mainly high value added products, supplied by private companies and SMEs. When American customers find alternatives, it will be very difficult for them to regain market share.
According to Nomura, the new US tariff package will have a limited impact on Chinese exporters in the short term because target products account for only 4.2% of total US imports from China and less than 1% of total exports of this country.
However, China’s exports could spike this year with products subject to tariffs in 2025 and 2026.
The more worrying impact is that other economies will follow similar trade restrictions to the US, especially with the EU and UK. “Increased trade tensions could hinder the export sector and encourage more supply chain relocation out of China in the long term”, Nomura’s analysis stated.
Nguồn: vnexpress.net
